10709 jpm income capital half year report · 2017-02-03 · 2 | JPMorgan Income & Capital Trust plc. Half Year Report & Accounts 2009 Introduction and Performance The first half of

Half Year Report09JPMorgan Income & Capital Trust plc

Half Year Report & Accounts for the six months ended 31st August 2009

Features

Objective

To meet the final capital entitlement of the Zero Dividend Preference shares and toprovide Ordinary shareholders with a regular quarterly income and capital growth.

Policies

– The Company seeks to achieve its objective by investing principally in UK equitiesand investment grade fixed interest securities.

– To invest no more than 15% of gross assets in other UK listed investmentcompanies (including investment trusts).

– To use gearing when appropriate to increase potential returns to shareholders.

Benchmark

A composite benchmark comprising 90% FTSE 350 Index (excluding investmenttrusts) and 10% Merrill Lynch 5-10 year UK Sterling Corporate Index for bonds.

Capital Structure

For details of the capital structure of the Company please refer to page 15.

Life of the Company

The Company has a fixed life of ten years, which expires at the end of February2018.

Management Company

The Company employs JPMorgan Asset Management (UK) Limited (‘JPMAM’) tomanage its assets.

Contents

About the Company

1 Half Year Performance2 Chairman’s Statement 4 Investment Managers’ Report

Investment Review

6 Ten Largest Equity Investments 7 Portfolio Analyses

Accounts

8 Income Statement9 Balance Sheet 10 Cash Flow Statement 11 Notes to the Accounts

Shareholder Information

14 Interim Management Report15 Capital Structure of the Company 16 Glossary of Terms17 Information about the Company

JPMorgan Income & Capital Trust plc. Half Year Report & Accounts 2009 | 1

Half Year PerformanceTotal Returns (capital plus income)

31st August 28th February %2009 2009 change

AssetsShareholders’ funds (£’000) 92,274 75,309 +22.5

Zero Dividend Preference sharesNet assets (£’000) 50,830 49,197 +3.3

Net asset value per share 110.3p 106.7p +3.3

Share price 100.75p 89.50p +12.6

Share price discount to net asset value (8.7%) (16.1%)

Ordinary sharesNet assets (£’000) 41,444 26,112 +58.7

Net asset value per share 61.4p 38.7p +58.7

Share price 64.50p 48.25p +33.7

Share price premium to net asset value 5.0% 24.7%

Dividends paid on the Ordinary shares during the period amount to 3.75p per share

Units2

Net asset value per unit 233.1p 184.1p +26.6

Share price 213.0p 174.5p +22.1

Share price discount to net asset value (8.6%) (5.2%)

A glossary of terms is provided on page 16.

1Source: J.P. Morgan2A Unit comprises two Ordinary shares and one Zero Dividend Preference share.3Source: Morningstar4Source: MSCI – The Company’s benchmark is a composite comprising 90% FTSE 350 Index(excluding Investment Trusts) and 10% Merrill Lynch 5-10 year UK Sterling Corporate Index for bonds.

Financial Data

+75.1%Ordinary share net

asset value total return1

+31.8%Unit net asset value

total return1,2

+3.3%Zero Dividend

Preference share net

asset value total return1

+44.6%Ordinary share price

total return3

+27.4%Unit share price total

return2,3

+12.6%Zero Dividend

Preference share price

total return3

+32.0%Composite benchmark

return4

+27.6% Shareholders’ funds

total return

2 | JPMorgan Income & Capital Trust plc. Half Year Report & Accounts 2009

Introduction and Performance

The first half of this financial year witnessed extreme volatility in equity marketswith a severe fall in March 2009 before recovering sharply.

During the six months ended 31st August 2009, the overall net asset value of theCompany recovered significantly, increasing by 27.6%. By comparison, thecomposite benchmark (comprising 90% FTSE 350 Index and 10% Merrill Lynch5-10 year UK Sterling Corporate Index for bonds) recorded a rise of 32.0% duringthe same period. The principal reason for underperforming the benchmark indexwas the desire by our investment management team to hold quality high-yieldingstocks during a period of extreme market volatility. Although these stocks didrecover sharply, they had in general not fallen as far as more risky, low yieldingstocks which outperformed in the recovery phase.

The Investment Manager’s report gives a detailed commentary on the marketsduring the first half of the financial year and how the current portfolio has beenrestructured and positioned in response to market conditions.

Share Price Performance

The prices of the Company’s two classes of share and of its Units comprising twoOrdinary shares and one ZDP share were at a premium / (discount) to net assetvalue at the previous period end dates as follows:

31st August 2009 28th February 2009 31st August 2008

ZDP (8.7)% (16.1)% (5.6)%

Ordinary 5.0% 24.7% (17.4)%

Units (8.6)% (5.2)% (17.8)%

Since the period end, share prices have been very volatile. At 13th October 2009,the price of the Ordinary shares was at a premium of 0.7%, whilst the ZDP shareprice and Unit price was at a premium of 1.5% and a discount of 5.3% respectively.

Revenue and Dividends

Revenue after tax and before dividends for the period was £2.02 million andrevenue return per Ordinary share was 3.0 pence. The decline in income reflectsdividend cuts from a number of portfolio companies as well as lower depositinterest income received from cash on deposit.

During the six months the Board has declared two quarterly interim dividends,each of 1.25p per Ordinary share, payable to Ordinary shareholders and Unitholders on 31st July 2009 and 30th October 2009. The Board anticipates that,in the absence of unforeseen circumstances, the Company will be in a position tomaintain the current level of quarterly dividends to Ordinary shareholders and Unitholders for the remainder of the current financial period to 28th February 2010.

The undistributed revenue reserves, after allowing for the payment of the secondinterim dividend, are approximately £0.92 million.

Chairman’s Statement


Hurdle Rate

The Hurdle Rate measures the amount by which the total assets of the Companyhave to grow each year in order to return the current share price to Ordinaryshareholders when the Company winds up in February 2018. At 31st August 2009,the Hurdle Rate required to return the Ordinary share price of 64.5p was 4.3% perannum and the Hurdle rate to return the Final Capital Entitlement of 192.13p of theZDP shares was -0.5%.

At 2nd October 2009, the Hurdle Rate required to return the current Ordinaryshare price of 66.75p was 5.1% per annum and to return the Final CapitalEntitlement of the ZDP shares of 192.13p was 0%.

Outlook

Considerable uncertainty surrounds the strength and sustainability of the recentrecovery in financial markets. The improvement derived from an extraordinarylevel of government support ranging from “quantitative easing,” low interest ratesand fiscal deficits may be offset by rising unemployment, continuing deleverage bycompanies and individuals and the prospect, at some stage, of fiscal and monetarytightening. The Board is confident that the Company’s portfolio is reasonablypositioned in the context of this uncertainty and its investment objectives.

SSiirr LLaauurreennccee MMaaggnnuuss BBttChairman 14th October 2009


Market Review

It was a strong six months for UK investors, with equities surging higher andcorporate bond spreads narrowing significantly as the emergence of someencouraging economic “green shoots” allowed markets to move away from pricingin another Great Depression which had been the case in early March 2009.UK equities, as measured by the FTSE 350 Index, ended the six month reviewperiod +33.3% above the level of our Company’s financial year end on the28th February 2009. During this period the Merrill Lynch 5-10 Year UK SterlingCorporate Index for bonds delivered a return of +19.9%, resulting in the Company’scombined benchmark delivering a return of +32.0% for the period under review.

Following the challenging to start to calendar 2009 when equity marketsworldwide came under severe pressure, governments and central banks aroundthe world took drastic action to stave off a worsening of the financial andeconomic crises. In early March 2009 UK interest rates were reduced to a recordlow of just 0.5% and the Bank of England took the unprecedented step ofannouncing plans to buy £75 billion of government bonds. This programme iscalled quantitative easing and its aim is to bring down borrowing costs forbusinesses and individuals by forcing long-term government bond yields lower.

As the six months progressed, signs began to emerge that the unprecedentedmonetary policy action, combined with the various government stimulus packagesmay be working. Economic data began to suggest that the pace of economiccontraction was slowing, with the services purchasing managers’ index picking upand retail sales rising again. Even housing market reports have suggested thathouse prices may at last be stabilising after falling sharply since late 2007.

The result of this better economic news, and improving corporate sentiment, was avery sharp rebound in both equities and corporate bonds as investors, no longerconcerned that the world was heading for economic meltdown, began to regaintheir appetite for risk.

Performance Review

The overall net asset value of the Company recovered markedly during the firsthalf of this year, rising by +27.6%, in comparison with the composite benchmark’sreturn of +32.0%.

In terms of contributors to performance over the half year, the Company’sunderweight position in the banking sector, particularly not owning Lloyds BankingGroup or Royal Bank of Scotland, negatively impacted performance, althoughbeing overweight in HSBC was a positive contributor. By contrast, the Companybenefited from being overweight in both general financials and life insurance,notably Tullett Prebon and Investec, two lowly valued financial stocks thatoutperformed the rising market. However, the fund’s overweight positions in someof the high yielding, more defensive stocks and sectors, including British AmericanTobacco and GlaxoSmithKline were detrimental during such a strong market rally,where the very cyclical and often non-yielding stocks led the market higher.

Investment Managers’ Report

John Baker

Sarah Emly


Portfolio Review

At the beginning of the new financial year the Company had a modest overweightposition in equities, with the balance held in cash. In April, as the general marketoutlook became more stable, we reduced the cash level and purchased a 5%position in a Global Corporate Bond Fund as a diversified approach to enhancingincome yield whilst also benefiting from corporate recovery and reducing ourunderweight position in fixed income assets relative to the Company’s benchmark.During the first half of the year we sold some stocks that no longer lookedattractively valued or were at risk of delivering disappointing newsflow, such asTui Travel, the tour operator, which after a period of strong performance was nolonger attractively valued and whose trading outlook became less certain.We also reduced our positions in some of the more defensive stocks that hadoutperformed the falling market of early 2009, such British American Tobacco andTesco. By contrast, we bought into stocks that were lowly valued and deliveringimproving newsflow, whilst also participating in the two major rights issues ofHSBC and Rio Tinto, to increase our existing positions in these attractive stocks.We added to our position in Barclays, the UK bank which has not had to acceptgovernment support, whilst introducing some slightly more cyclical names such asNext, Northern Foods and Restaurant Group. We are focusing on ensuring that theportfolio remains sensibly balanced to benefit from economic and corporaterecovery whilst also holding stocks with resilient earnings and dividend prospects.

Economic and Market Outlook

UK equity valuations continue to look broadly attractive, both on an historic basisand relative to government bond yields. The UK economy, although still weak, islikely to benefit from the significant government stimulus measures and centralbank easing, which in turn should help boost corporate earnings expectations.

However, with global credit conditions still tight and with household de-leveragingand rising unemployment likely to constrain the extent of the rebound inconsumer spending, any economic recovery through the rest of 2009 is likely to bemodest. Nevertheless, there are several factors that we think may continue tosupport equities for the time being. High unemployment will keep wage growthlow, helping to support corporate earnings until companies can generate higherrevenues. Meanwhile, central banks have indicated that they currently haveno intention of increasing interest rates from the current very low levels.Much uncertainty still exists, especially given the challenging state of government,corporate and consumer finances. However, recent economic and corporatenewsflow has become more encouraging, and provided this trend continues,current equity market levels should be supported.

JJoohhnn BBaakkeerrSSaarraahh EEmmllyyInvestment ManagersJPMorgan Asset Management (UK) Limited 14th October, 2009


at 31st August 2009Ten Largest Equity Investments

Valuation Company Sector £’000 %1

HSBC Financials 8,930 9.7Royal Dutch Shell Oil & Gas 7,801 8.5BP Oil & Gas 6,992 7.6GlaxoSmithKline Healthcare 4,461 4.8Vodafone Telecommunications 4,348 4.7BHP Billiton Basic Materials 3,628 3.9British American Tobacco Consumer Goods 3,061 3.3AstraZeneca Healthcare 2,984 3.2Rio Tinto Basic Materials 2,482 2.7Barclays Financials 2,396 2.6

Total 47,083 51.0

1Based on total assets less current liabilities of £92.3m.

As at 28th February 2009, the value of the ten largest investments amounted to £40.6m representing 53.9% of total assets less current liabilities.


Portfolio Analyses

31st August 2009 Benchmark 28th February 2009 Benchmark%1 % %1 %

Equities 94.0 90.0 93.4 90.0Fixed interest 4.7 10.0 – 10.0Liquidity funds 0.4 – 7.9 –Net current assets/(liabilities) 0.9 – (1.3) –

100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £92.3m (28th February 2009: £75.3m).

Class of security

31st August 2009 28th February 2009Portfolio Benchmark Portfolio Benchmark

% % % %

Financials 24.0 20.3 13.8 13.4Oil & Gas 19.2 17.2 22.2 20.2Basic Materials 9.2 9.3 6.1 6.6Industrials 8.4 6.0 9.9 6.3Healthcare 8.1 7.5 10.0 8.8 Consumer Goods 7.9 10.7 8.2 12.4Consumer Services 7.8 8.9 8.6 9.7Telecommunications 5.7 5.6 7.9 6.9Utilities 2.8 3.3 5.8 4.6Technology 0.9 1.2 0.9 1.1

Total equities 94.0 90.0 93.4 90.0Fixed interest 4.7 10.0 — 10.0Liquidity funds 0.4 — 7.9 —Net current assets/(liabilities) 0.9 — (1.3) —

Total 100.0 100.0 100.0 100.0

Based on total assets less current liabilities of £92.3m (28th February 2009: £75.3m).

Sector Analysis


Income Statementfor the six months ended 31st August 2009

(Unaudited) (Unaudited) (Audited)Six months ended Period ended Period ended31st August 2009 31st August 2008 28th February 2009

(note 2) (note 2)Revenue Capital Total Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Gains/(losses) on investmentsheld at fair value through profit or loss – 17,665 17,665 — (3,602) (3,602) — (37,134) (37,134)

Income from investments 2,292 – 2,292 2,901 — 2,901 4,782 — 4,782Other interest receivable and

similar income 57 – 57 678 — 678 864 — 864

Gross return/(loss) 2,349 17,665 20,014 3,579 (3,602) (23) 5,646 (37,134) (31,488)Management fee (131) (196) (327) (178) (267) (445) (328) (493) (821)Other administrative expenses (190) – (190) (198) — (198) (440) — (440)

Net return/(loss) on ordinary activities before finance costs and taxation 2,028 17,469 19,497 3,203 (3,869) (666) 4,878 (37,627) (32,749)

Finance costs – appropriations – (1,633) (1,633) — (1,528) (1,528) — (3,107) (3,107)Finance costs – other (12) (19) (31) (2) (3) (5) (29) (43) (72)Dividends on Ordinary shares

(note 4) (2,532) – (2,532) (775) — (775) (2,388) — (2,388)

Net (loss)/return on ordinary activities before taxation (516) 15,817 15,301 2,426 (5,400) (2,974) 2,461 (40,777) (38,316)

Taxation – – – (190) 75 (115) (179) 140 (39)

Net (loss)/return on ordinary activities after taxation (516) 15,817 15,301 2,236 (5,325) (3,089) 2,282 (40,637) (38,355)

Return/(loss) per Ordinary share (note 5) 3.0p 23.4p 26.4p 4.9p (8.6)p (3.7)p 7.3p (63.4)p (56.1)p

Return per Zero DividendPreference share – 3.5p 3.5p — 3.3p 3.3p — 6.7p 6.7p

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columns represent supplementary information prepared underguidance issued by the Association of Investment Companies. The Total column represents all the information that is required to be disclosed in a ‘Statement of Total RecognisedGains and Losses’ (‘STRGL’). For this reason a STRGL has not been presented.

(Unaudited) (Unaudited) (Audited)31st August 2009 31st August 2008 28th February 2009

£’000 £’000 £’000

Fixed assetsInvestments held at fair value through profit

or loss 91,067 103,162 70,317

Investment in liquidity funds held at fair valuethrough profit or loss 413 500 5,980

91,480 103,662 76,297

Current assets

Debtors 584 885 665

Cash and short term deposits 558 1,663 205

1,142 2,548 870

Creditors: amounts falling due within one year (275) (520) (1,858)

Derivative financial instruments held at fairvalue through profit or loss (73) (499) —

Net current assets/(liabilities) 794 1,529 (988)

Total assets less current liabilities 92,274 105,191 75,309

Total net assets 92,274 105,191 75,309

Zero Dividend Preference shares 50,830 47,565 49,197

Ordinary shares 41,444 57,626 26,112

92,274 105,191 75,309

Net asset values (note 6)

Per Zero Dividend Preference share 110.3p 103.3p 106.7p

Per Ordinary share 61.4p 93.8p 38.7p

Balance Sheet at 31st August 2009




(note 2) (note 2)£’000 £’000 £’000

Net cash inflow from operating activities(note 7) 1,853 2,256 3,803

Net cash outflow from servicing of finance (2,532) (780) (2,398)

Net cash inflow/(outflow) from capitalexpenditure and financial investment 1,032 (3,483) (8,305)

Net cash inflow from financing – 3,670 7,105

Increase in cash for the period 353 1,663 205

Reconciliation of net cash flow to movement in net funds

Net cash movement 353 1,663 205

Net funds at the beginning of the period 205 — —

Net funds at the end of the period 558 1,663 205

Represented by:Cash and short term deposits 558 1,663 205

Cash Flow Statementfor the six months ended 31st August 2009


1. Financial statements

The information contained within the Financial Statements in this half year report has not been audited or reviewed bythe Company’s auditors.

The figures and financial information for the period ended 28th February 2009 are extracted from the latest publishedaccounts of the Company and do not constitute statutory accounts for that period. Those accounts have been delivered tothe Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statementunder either section 498(2) or 498(3) of the Companies Act 2006.

2. Comparative accounting periods

The comparative accounts cover the periods from 13th December 2007 (the date of incorporation) to 31st August 2008and 13th December 2007 to 28th February 2009. The Company began investing on 3rd March 2008.

3. Accounting policies

The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (‘UKGAAP’) and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies’ issued inJanuary 2009.

All of the Company’s operations are of a continuing nature.

The accounting policies applied to these half year accounts are consistent with those applied in the accounts for theperiod ended 28th February 2009.

4. Dividends on Ordinary shares


(note 2) (note 2)£’000 £’000 £’000

Fourth quarterly dividend of 1.25p paid in April 844 N/a N/a

Special dividend of 1.25p paid in April 844 N/a N/a

First quarterly dividend of 1.25p (2008: 1.25p) paid in July 844 775 775

Second quarterly dividend of 1.25p paid in October N/a N/a 769

Third quarterly dividend of 1.25p paid in January N/a N/a 844

Total dividends paid in the period 2,532 775 2,388

A second quarterly dividend of 1.25p (2008: 1.25p) per Ordinary share amounting to £844,000 (2008: £769,000) has beendeclared payable in respect of the six months ended 31st August 2009. The increased cost of dividends payable is due tothe 6,100,000 Ordinary shares issued in October and November 2008.

Notes to the Accountsfor the six months ended 31st August 2009


Notes to the Accounts continued

5. Return/(loss) per Ordinary share

Return/(loss) per Ordinary share is based on the weighted average number of Ordinary shares in issue during the periodof 67,506,782 (period ended 31st August 2008: 61,957,859 and period ended 28th February 2009: 64,084,669).


(note 2) (note 2)£’000 £’000 £’000

Revenue return per Ordinary shareNet revenue (loss)/return on ordinary activities after taxation (516) 2,236 2,282

Add back dividends on Ordinary shares 2,532 775 2,388

Revenue return attributable to Ordinary shareholders 2,016 3,011 4,670

Revenue return per Ordinary share (pence) 3.0p 4.9p 7.3p

Capital return/(loss) per Ordinary shareCapital return/(loss) attributable to Ordinary shareholders 15,817 (5,325) (40,637)

Capital return/(loss) per Ordinary share (pence) 23.4p (8.6)p (63.4)p

6. Net asset values

Net asset values per share calculated in accordance with the Articles of Association are as follows:

Zero Dividend Preference shares (Unaudited) (Unaudited) (Audited)31st August 2009 31st August 2008 28th February 2009

Net assets attributable (£'000) 50,830 47,565 49,197Shares in issue at the period end 46,087,200 46,037,200 46,087,200Net asset value per share 110.3p 103.3p 106.7p

Ordinary shares (Unaudited) (Unaudited) (Audited)31st August 2009 31st August 2008 28th February 2009

Net assets attributable (£'000) 41,444 57,626 26,112Shares in issue at the period end 67,506,782 61,406,782 67,506,782Net asset value per share 61.4p 93.8p 38.7p


7. Reconciliation of net return/(loss) on ordinary activities before finance costs and taxation to net cash inflow from operatingactivities


(note 2) (note 2)£’000 £’000 £’000

Net return/(loss) on ordinary activities before finance costs and taxation 19,497 (666) (32,749)

Add back capital (return)/loss before finance costs and taxation (17,469) 3,869 37,627

Scrip dividends included in income – — (64)Decrease/(increase) in net debtors and accrued income 21 (688) (516)Net premium on debt securities allocated to income – 8 8Management fee charged to capital (196) (267) (493)Overseas withholding tax and UK income tax – — (10)

Net cash inflow from operating activities 1,853 2,256 3,803


Interim Management Report

The Company is required to make the following disclosuresin its half year report:

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Companyfall into five broad categories: investment and strategy;accounting, legal and regulatory; corporate governance andshareholder relations; operational; and financial. Informationon each of these areas is given in the Business Review withinthe Annual Report and Accounts for the period ended28th February 2009.

During the recent period of market turmoil, JPMAM reactedwith heightened management scrutiny of counterparty risk.In addition, reviews were initiated of exposures, policies,procedures and legal arrangements applicable to the majorsources of counterparty exposure.

Related Parties Transactions

During the first six months of the current financial year, notransactions with related parties have taken place whichhave materially affected the financial position or theperformance of the Company during the period.

Directors’ Responsibilities

The Board of Directors confirms that, to the best of itsknowledge:

(i) the condensed set of financial statements containedwithin the half yearly financial report has been preparedin accordance with the Accounting Standards Board’sStatement ‘Half-Yearly Financial Reports; and

(ii) the interim management report includes a fair review ofthe information required by DTR 4.2.7R and 4.2.8R of theUK Listing Authority Disclosure and Transparency Rules.

For and on behalf of the BoardSSiirr LLaauurreennccee MMaaggnnuuss BBttChairman 14th October 2009

Capital Structure of the Company

The Company’s capital consists of Ordinary shares of 1p eachand Zero Dividend Preference shares (‘ZDPs’) of 1p eachwhich are traded on the London Stock Exchange, bothseparately and in the form of Units (each comprising twoOrdinary shares and one ZDP),

Ordinary shares

Investment CharacteristicsThe Ordinary shares are designed to provide a regularquarterly income, together with the potential for capitalgrowth. Ordinary shareholders should note that the Ordinaryshares are considered to carry above-average risk.

EntitlementsOrdinary shareholders are entitled to all dividends paid bythe Company and, on a winding-up, to all of the Company’snet surplus assets (including any growth in their value) afterany indebtedness has been repaid and the prior entitlementof the holders of ZDPs has been met in full.

Voting RightsOrdinary shareholders have the right to vote at generalmeetings and, on a poll, to one vote for each Ordinary shareheld.

Zero Dividend Preference shares

Investment CharacteristicsThe ZDPs are designed to provide a pre-determined, but notguaranteed, capital entitlement ranking in priority to theOrdinary shares. Because of their prior capital entitlementand pre-determined growth, they are considered to carrybelow-average risk.

EntitlementsThe ZDPs are not entitled to any dividends and are designedto provide a predetermined Final Capital Entitlement payableon the ZDP Repayment Date which ranks behind theCompany’s creditors, but in priority to the Ordinary shares(except for any revenue profits). The final Capital Entitlementper ZDP Share due on the ZDP Repayment Date equates toan annual return of 6.75 per cent per annum compound ontheir issue price of 100p.

Voting RightsHolders of ZDPs will be entitled to attend and vote at allgeneral meetings of the Company and, on a poll, to one votefor each ZDP held. Holders of ZDPs will not, however, beentitled to vote on resolutions relating to the payment ofdividends to Ordinary shareholders and of the revenueprofits of the Company.

UnitsThe Units each consist of two Ordinary shares and one ZDP.

Investment CharacteristicsThe Units are designed to provide a regular quarterly incometogether with the potential for capital growth. The incomeyield provided by the Units is lower than that provided by theOrdinary shares, but the inclusion of the ZDP in each Unitmeans that the capital risk is also lower. Unitholders shouldnote therefore, that the Units are considered to carry less riskthan the Ordinary shares but more risk than the ZDPs.

Entitlements and Voting RightsUnitholders have the same entitlements and voting rights asif they held separately the Ordinary shares and ZDPscomprised in their Units. In addition, they will be entitled inrespect of the component shares comprised in their Units tovote at class meetings of both the Ordinary shareholders andZDP shareholders convened to consider certain proposalswhich would be likely to affect their position.



Glossary of Terms

Shareholders funds total returnChange in net assets with net income reinvested, excludingthe effect of share issues and share repurchases.

Composite benchmark return

Total return on the benchmark, on a mid-market value tomid-market value basis, assuming that all dividends quotedex-dividend during the period were reinvested in the sharesof the underlying companies, at the time the shares werequoted ex-dividend, without transaction costs.

The benchmark comprises two recognised indices of stockswhich should not be taken as wholly representative of theCompany’s investment universe. The Company’s investmentstrategy does not follow or ‘track’ these indices and,consequently, there may be some divergence between theCompany’s performance and the benchmark performance.

Ordinary share price total return

Total return to the investor based on the change in theOrdinary share mid market price and assuming that alldividends quoted ex-dividend during the period werereinvested into Ordinary shares at the time the shares werequoted ex-dividend, without transaction costs.

Unit share price total return

Total return to the investor based on the change in the Unitmid market price and assuming that all dividends quoted ex-dividend during the period were reinvested into Units at thetime the Units were quoted ex-dividend, without transactioncosts. Note that a Unit comprises two Ordinary shares andone Zero Dividend Preference share.

Zero Dividend Preference share price total return

Total return to the investor based on the change in the ZeroDividend Preference share mid market price.

Ordinary share net asset value total return

Return to the investor based on the change in the net assetvalue (‘NAV’) per Ordinary share and assuming all dividendsquoted ex-dividend during the period were reinvested intoOrdinary shares at the NAV per Ordinary share at the timethe shares were quoted ex-dividend.

Unit net asset value total return

Return to the investor based on the change in the Unitnet asset value (‘NAV’) and assuming all dividends quoted ex-dividend in respect of a Unit during the period werereinvested into Units at the NAV per Unit at the time theUnits were quoted ex-dividend. Note that a Unit comprisestwo Ordinary shares and one Zero Dividend Preferenceshare.

Share price discount/premium to net asset value (‘NAV’)

If the share price of an investment company is lower than thenet asset value (NAV) per share, the shares are said to betrading at a discount. The discount is shown as a percentageof the NAV. The opposite of a discount is a premium. It ismore common for an investment company’s shares to tradeat a discount than at a premium.


Information about the Company

History

The Company is an investment trust which was launched as thesuccessor vehicle to JPMorgan Income & Capital Investment Trustplc. Dealings in the securities of the Company began on 3rd March2008 and the Company has a fixed life of 10 years. Accordingly, theCompany will be wound-up on 28th February 2018 unless, prior tothat date, shareholders and unitholders approve alternativearrangements.

Directors

Sir Laurence Magnus Bt (Chairman)Roderick CollinsAntony Hichens (Chairman of the Audit Committee)Richard HillsJames West

Company Numbers

Company registration number: 6453183London Stock Exchange numbers:

Ordinary shares: B2NBJ06Units: B2NBJ40ZDPs: B2NBJ28

ISIN:Ordinary shares: GB00B2NBJ068Units: GB00B2NBJ407ZDPs: GB00B2NBJ282

Bloomberg codes:Ordinary shares: JPI LNUnits: JPIU LNZDPs: JPIZ LN

Market Information

The Company’s shares are listed on the London Stock Exchange.The market price is shown daily in the Financial Times, The Times,the Daily Telegraph, The Scotsman, The Independent and on theJPMorgan website at www.jpmincomeandcapital.co.uk, where theshare price is updated every fifteen minutes during trading hours.

Website

www.jpmincomeandcapital.co.uk

Share Transactions

The Company’s shares may be dealt in directly through astockbroker or through professional adviser acting on an investor’sbehalf. They may also be purchased and held through the JPMorganInvestment Trust Share Plan, Individual Savings Account (‘ISA’), andPension Account.

Manager and Secretary

JPMorgan Asset Management (UK) Limited

Company’s Registered Office

Finsbury Dials20 Finsbury StreetLondon EC2Y 9AQTelephone number: 020 7742 6000

For company secretarial and administrative matters please contactDivya Amin.

Registrars

EquinitiReference 2422,Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone number: 0871 384 2633

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrar quoting reference 2422.

Registered shareholders can obtain further details on holdings onthe internet by visiting www.shareview.co.uk.

Independent Auditors

PricewaterhouseCoopers LLPHay’s Galleria1 Hay’s LaneLondon SE1 2RD

Brokers

Winterflood SecuritiesThe Atrium BuildingCannon Bridge25 Dowgate HillLondon EC4R 2GA

Savings Product Administrators

For queries on the JPMorgan ISA, Share Plan or Pension Plan, seecontact details on the back cover of this report.

Financial CalendarFinancial year end 28th February

Final results announced April/May

Half year end 31st August

Half year results announced October

Interim Management Statements announced June and December

Dividend on Ordinary shares January, April, July and October

Annual General Meeting July

A member of the AIC

JPMorgan HelplineFreephone 0800 20 40 20 or 0207 742 99998.30 am to 5.3o pm Monday to Friday

Your telephone call may be recorded for your security

www.jpmincomeandcapital.co.uk

Documents

10709 jpm income capital half year report · 2017-02-03 · 2 | JPMorgan Income & Capital Trust plc. Half Year Report & Accounts 2009 Introduction and Performance The first half of